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ARR Multiple

What is ARR Multiple?

ARR Multiple calculates the ratio between a company’s valuation and its Annual Recurring Revenue (ARR).

How to calculate ARR Multiple

ƒ Sum(Valuation) / Sum(ARR)

Example

A company that is worth $100M and earns an ARR of $10M has an ARR multiple of 10X.

More about this metric

ARR Multiple, which divides a company’s worth by its annual recurring revenue, is mainly used to determine how a company’s ARR stacks against its valuation. Investors value companies based on multiple factors including revenue and growth. By calculating the ARR Multiple, you get a good picture of how a company has been valued based on ARR. In general, public cloud companies range between 4X and 9X.

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